TEST #1 CHAPTERS 1-4

REVIEW
PERSONAL FINANCE FOR FISCAL WELLNESS
DAN W. ROYER, ED.D., CPA
 BEGIN WITH FINANCIAL PLANNING AND GOALS
• PERSONAL FINANCIAL PLANNING IS THE PROCESS OF ORGANIZING AND
PLANNING YOUR INCOME, EXPENSES, AND SAVINGS TO ACCOMPLISH
SIGNIFICANT LONG-TERM GOALS.
• PERSONAL FINANCIAL PLANNING IS A HOLISTIC APPROACH THAT GOES
BEYOND INVESTING AND SAVINGS ACCOUNTS.
• SHORT TERM GOALS PROVIDE A WAY OF DEVELOPING DISCIPLINE IN THE
PROCESS AND PROVIDE A SENSE OF ACCOMPLISHMENT
• MID-TERM GOALS SHOULD BE SET BETWEEN ONE AND THREE YEARS AND
REQUIRE ADDITIONAL EFFORT
• LONG-TERM GOALS EXTEND BEYOND THREE YEARS, BUT IT IS EASIER TO PLAN
GOALS IN FIVE YEAR SEGMENTS RATHER THAN OVER AN EXTENDED PERIOD OF
TIME (20-30 YEARS)
THE DIFFERENCE BETWEEN SHORT-TERM AND
LONG-TERM FINANCIAL GOALS IS

a. RELATED TO THE RELATIVE TIMING OF A FINANCIAL DECISION

b. RELATED TO THE TYPE OF INVESTMENT INSTRUMENTS PURCHASED
c. RELATED TO THE TIMING WHEN THE GOAL IS ACHIEVABLE
d. RELATED TO THE RELATIVE RISKINESS OF EACH INVESTMENT
e. ONLY A AND C
 KNOW WHAT A NET WORTH STATEMENT IS
• TELLS YOU WHERE YOU ARE RIGHT NOW
• IS A LISTING OF ALL THAT YOU OWN AND ALL THAT YOU OWE
• SUBTRACTING WHAT YOU OWE FROM WHAT YOU OWN PROVIDES YOU WITH
YOUR FINANCIAL NET WORTH
• THERE IS A GOOD EXAMPLE IN THE BOOK ON PP 13, 14.
 REMEMBER THE PROFESSIONAL DESIGNATIONS FOR
FINANCIAL PLANNERS

• CERTIFIED FINANCIAL PLANNER (CFP)

• TOP PROFESSIONAL DESIGNATION AND A PERSON WITH KNOWLEDGE OF INVESTMENTS, ESTATE, AND
RETIREMENT PLANNING. HAVE COMPLETED COURSEWORK AND PASSED COMPREHENSIVE EXAMS

• CHARTERED FINANCIAL CONSULTANT (CHFC)

• HAVE COMPLETED COURSEWORK AND PASSED EXAMS IN INVESTING, INSURANCE, TAXES, AND ESTATE
PLANNING, IN ADDITION TO THREE YEARS OF WORK EXPERIENCE

• CERTIFIED PUBLIC ACCOUNTANT AND PERSONAL FINANCIAL SPECIALIST (CPA AND PFS)
• THIS DESIGNATION IS FOR A CPA WHO HAS ALSO COMPLETED ADDITIONAL TRAINING RELATED TO
FINANCIAL PLANNING

• CHARTER LIFE UNDERWRITER (CLU)

• ARE EMPLOYED BY LIFE INSURANCE COMPANIES AND HAVE BEEN TRAINED IN SIMILAR TOPICS TO A
CHARTERED FINANCIAL CONSULTANT
 BUDGETING
PERSONAL FINANCE FOR FISCAL WELLNESS
DAN W. ROYER, ED.D., CPA
 A BUDGET IS A DETAILED FINANCIAL PLAN
• A BUDGET PROVIDES A STRUCTURE TO HANDLE MONEY THAT BUILDS IN
FINANCIAL GOALS
• BUDGETS PLAN FOR SPENDING, SAVING, AND INVESTING.
• A BUDGET SHOULD ACCOMMODATE AN OCCASIONAL INDULGENCE OR
LUXURY AS WELL AS INVESTING FOR FUTURE GOALS.
• SUCH A PLAN PREVENTS FINANCING CONSUMABLES THAT RESULT IN HIGH
INTEREST CREDIT CARD DEBT.
• THE MOST IMPORTANT CONCEPT IN A BUDGET IS TO PAY YOURSELF FIRST
(FUNDING FUTURE FINANCIAL GOALS EACH AND EVERY MONTH).
 RECALL BASIC APPROACHES TO BUDGETING
• BUDGET MODELS
• BEGIN WITH A BASIC BUDGET THAT IDENTIFIES YOUR INCOME AND EXPENSES.
• IDENTIFY THE DIFFERENCE BETWEEN FIXED AND NONFIXED EXPENSES
• FIXED EXPENSES INCLUDES THINGS LIKE CAR PAYMENTS, ETC.
• NON-FIXED EXPENSES ARE EXPENSES THAT VARY EACH MONTH (UTILITIES, ETC)

• TRACK EVERYTHING YOU SPEND

• TO BEGIN WITH WRITE DOWN EVERYTHING YOU SPEND USING CASH, CREDIT CARDS, CHECKS AND DEBIT
CARDS DURING A WEEK.
• DO NOT COUNT THE NORMAL BILL-PAYING EXPENSES, BUT COUNT ONLY THE THINGS YOU SPEND OUT OF
POCKET.

• OPTIONS FOR EXPENSES THAT VARY THROUGHOUT THE YEAR

• CUT EXPENSES TO SAVE MONEY IN MONTHS WITH HIGHER EXPENSES
• SAVE MONEY FROM MONTHS WHEN YOU ARE EARNING A LARGER INCOME
• ADOPT A BUDGET PLAN WITH A PREDICTABLE MONTHLY AMOUNT DUE
 HOW CAN YOU DEAL WITH EXPENSES THAT
VARY?

a. FOCUS ON EXPENSES THAT YOU KNOW WILL BE CONSISTENTLY THE SAME

b. SET ASIDE MONEY IN A SAVINGS ACCOUNT RESERVED FOR THESE EXPENSES
c. WORK MORE HOURS TO COVER SEASONALLY HIGHER EXPENSES
d. CONSIDER ADOPTING A BUDGET PLAN FOR UTILITY EXPENSES IN ORDER TO
HAVE A PREDICTABLE MONTHLY PAYMENT
e. B&D
 UNDERSTAND THE REASONS FOR CREATING A
SPENDING PLAN
• A SPENDING PLAN PROVIDES TO THE RESPONSIBILITIES AND GOALS OF A BUDGET, BUT ALSO BUILDS IN
FLEXIBILITY TO ACCOMMODATE THE THINGS THAT BRING JOY TO YOUR LIFE.
• BASED ON THE RESULTS FROM TRACKING YOUR OUT OF POCKET SPENDING AND A REVIEW OF YOUR ROUTINE
EXPENSES
• THIS IS A DYNAMIC VERSION OF YOUR BUDGET THAT CAN BE AS SIMPLE OR SOPHISTICATED AS YOU WANT OR NEED.
• PLAN OUT WEEKLY SPENDING TO INCLUDE THOSE THINGS THAT YOU KNOW YOU MUST PAY (BILLS) AND THOSE
THAT COME AROUND ONLY SO OFTEN (HAIRCUTS).
• CONSIDER THE MONEY YOU ARE SAVING FOR A LONG TERM FINANCIAL GOAL SACRED, AND SHOULD NOT BE
WITHDRAWN EXCEPT IN DIRE CIRCUMSTANCES
• CHOOSE INVESTMENTS THAT ARE APPROPRIATE FOR YOUR SITUATION BECAUSE MOST INVESTMENTS ARE NOT
GOOD FOR HOLDING CASH ON A SHORT TERM BASIS.
• PLANNING SHOULD HELP YOU TO ESTABLISH A SUPPLY OF CASH TO PAY BILLS AND MEET SHORT-TERM NEEDS
(PARTICULARLY BETWEEN PAYCHECKS).
• YOU MAY ALSO HAVE SHORT TERM GOALS (SAVING TO MAKE A LARGE PURCHASE).
 PERSONAL FINANCIAL SOFTWARE

• THE USE OF A PERSONAL FINANCIAL SOFTWARE PACKAGE CAN STREAMLINE THE

EFFORT WHEN YOU ARE TRACKING EXPENSES AND SETTING UP A SPENDING PLAN
• ONE OF THE BEST FEATURES OF THIS SOFTWARE IS ONCE YOU ENTER THE
INFORMATION IT IS AVAILABLE IN A NUMBER OF DIFFERENT REPORTS
• THESE PACKAGES WILL GENERATE A BUDGET BASED ON YOUR SPENDING HABITS
• YOU ARE ALSO ABLE TO DOWNLOAD UPDATES FROM YOUR ACCOUNTS
REGULARLY BY CONNECTING YOUR BANK ACCOUNT TO THE SOFTWARE
 BANKING
PERSONAL FINANCE FOR FISCAL WELLNESS
DAN W. ROYER, ED.D., CPA
 KNOW DIFFERENCES BETWEEN
BANKS/INSTITUTIONS
• TRADITIONAL VS. ONLINE
• CHOICE IN BANKS IS MORE ABOUT DELIVERY THAN SERVICES
• SAVINGS & LOANS
• MAY OFFER MANY OF THE SAME SERVICES AS RETAIL BANKS.
• SAVINGS BANKS ARE HYBRID ORGANIZATIONS THAT FIT SOMEWHERE BETWEEN A
BANK AND AN S&L.

• CREDIT UNION
• OFFER SAME FINANCIAL SERVICES AS BANKS.
• MEMBER OWNED, SO PROFITS ARE RETURNED TO THE MEMBERS.
 FINANCIAL INSTITUTIONS WITH PROTECTION (FDIC/NCUA)

• FDIC
• PROTECTS INDIVIDUAL ACCOUNTS UP TO $250,000 AGAINST THE BANK FAILING. PLEASE NOTE:
THIS AMOUNT HAS BEEN UPDATED FOLLOWING CLASS, SEE HTTPS://
WWW.FDIC.GOV/DEPOSIT/COVERED/CATEGORIES.HTML FOR AN UPDATED SUMMARY FROM THE
FDIC.GOV WEBSITE.
• IF A JOINT ACCOUNT WITH EITHER PERSON HAVING ACCESS, THE FDIC INSURES IT UP TO $500,000
• ONLY COVERS IF THE BANK FAILS (BANKRUPTCY), DOES NOT COVER EMBEZZLEMENT.

• NCUA
NATIONAL CREDIT UNION ADMINISTRATION (NCUA) PROTECTS ACCOUNTS UP TO $250,000. PLEASE
NOTE THIS AMOUNT HAS BEEN UPDATED AFTER OUR CLASS SESSION. FOR MORE INFORMATION
SEE THE BROCHURE AT:
HTTPS://WWW.NCUA.GOV/LEGAL/GUIDESETC/GUIDESMANUALS/NCUAHOWYOURACCTINSURED.PD
F
 KNOW DIFFERENT TYPES OF CHECKING
ACCOUNTS
• DEMAND DEPOSIT CHECKING ACCOUNTS
• OPEN ACCESS TO ACCOUNT, WITHDRAWALS AT ANY TIME WITHOUT PENALTY.

• INTEREST-BEARING ACCOUNTS
• AN INTEREST BEARING ACCOUNT IS A CONCEPT PIONEERED AT CREDIT UNIONS.

• MONEY MARKETS
• BANK MONEY MARKET ACCOUNTS ARE NOT THE SAME AS MONEY MARKET MUTUAL FUNDS.
• GOOD FOR EMERGENCY FUNDS.

• ONLINE CHECKING ACCOUNTS

• YOU WILL HAVE THE SAME TYPE OF CHECKS AND AN ATM/DEBIT CARD TO USE, JUST LIKE YOU WOULD AT A
PHYSICAL BANK.
• BUSINESSES MAY CONSIDER THE CHECKS “OUT OF TOWN” CHECKS, BUT ATM/DEBIT CARDS ARE A WAY
AROUND THIS.
• PEOPLE ATTRACTED TO THIS TYPE OF ACCOUNT USUALLY WANT THE ELECTRONIC BILL PAYING FEATURE.
• A DIFFICULTY IS MAKING DEPOSITS WITHOUT A PHYSICAL LOCATION THAT IS USUALLY MANAGED VIA ATM
MACHINES (OR NOW THE FEATURE THAT ALLOWS YOU TO REMOTELY DEPOSIT CHECKS USING AN IMAGE).
 UNDERSTAND SAVINGS ACCOUNT BASICS
• PASSBOOK SAVINGS
• THIS IS THE MOST BASIC TYPE OF SAVINGS ACCOUNT AVAILABLE AT MOST INSTITUTIONS.
• THE NAME ORIGINATED FROM THE TIME WHEN A CUSTOMER CARRIED A SMALL BOOK
THAT THE TELLER WOULD DATE AND STAMP WITH EACH TRANSACTION.
• FOR A FEE, THE BANK WILL USUALLY TRANSFER MONEY INTO YOUR CHECKING
ACCOUNT. TO AVOID THE LARGER FEE FOR A BOUNCED CHECK.
• BECAUSE OF THE FEES AND LOW INTEREST YOU WILL NOT TYPICALLY MAKE MONEY ON
THESE ACCOUNTS, BUT YOU WILL NOT LOSE MONEY, EITHER.
 HAVING THE FDIC OR NCUA COVERAGE ON
MY FUNDS MEANS

a. MY DEPOSITS ARE GUARANTEED FOR UP TO $250,000.

b. MY DEPOSITS OF UP TO 250,000 ARE INSURED IF THE BANK FILES BANKRUPTCY.
c. IF MY PARTNER AND I BOTH HAVE EQUAL ACCESS TO THE ACCOUNT, THE
COVERAGE IS INCREASED TO 250,000 EACH ($500,000 TOTAL).
d. THIS IS COVERAGE FOR ANY KIND OF DEPOSIT, ACCOUNT, OR SERVICE THE
BANK OFFERS.
e. B&C
 KNOW THE CD OPTIONS
• THE BASIC CD IS A DEPOSIT THAT MUST REMAIN IN THE BANK FOR ANYWHERE BETWEEN SIX MONTHS TO
FIVE YEARS. WITH RATES INCREASING FOR LONGER TERMS.
• INCREASED RATE CD ALLOWS YOU TO “BUMP-UP” THE INTEREST RATE ON YOUR CD ONE TIME, HOWEVER,
THE CD BEGINS AT A RATE BELOW MARKET RATES.
• FLEXIBLE CD THIS CD ALLOWS YOU TO WITHDRAW MONEY FROM YOUR ACCOUNT WITHOUT A PENALTY,
ALTHOUGH THE NUMBER OF WITHDRAWALS IS RESTRICTED.
• CALLABLE CD IF INTEREST RATES DROP WHILE YOU HAVE A CD IN THE BANK AND YOU HAVE ONE OF THESE
CDS, THE BANK HAS THE RIGHT TO REDEEM THIS CD BEFORE MATURITY.
• NO INTEREST CDS DO NOT PAY A STATED INTEREST CHARGE, BUT YOU CAN BUY A $1,000 CD FOR A DISCOUNT
(I.E. $890) AND ACTUALLY EARN $110 (EVEN THOUGH IT IS NOT CALLED INTEREST).
• VARIABLE RATE CDS THESE CDS HAVE INTEREST RATES THAT CHANGE, USUALLY BASED ON AN INTEREST
RATE INDEX TIED TO THE U.S. TREASURY, ALONG WITH ACCOUNT BALANCE MINIMUMS.
• BROKERAGE CDS THESE ARE CDS THAT ARE BOUGHT AND SOLD IN THE MARKET MUCH LIKE OTHER
SECURITIES. YOU CAN LOSE MONEY THIS WAY, BUT IT MAY BE LESS EXPENSIVE THAN AN EARLY
WITHDRAWAL.
 UNDERSTAND OTHER BANK SERVICES/COMPOUNDING
• ATMS – AUTOMATIC TELLER MACHINES
• OVERDRAFT PROTECTION
• ONLINE BANKING
• PROVIDE THE OPPORTUNITY TO TRACK AND VIEW TRANSACTIONS IN YOUR ACCOUNT.
• MAY ALSO LINK UP WITH PERSONAL FINANCIAL SOFTWARE TO DOWNLOAD TRANSACTIONS AND
STATEMENTS.
• ONLINE BILL PAY MAY ALSO BE AVAILABLE.

• 10,000 COMPOUNDED AT 4 PERCENT FOR ONE YEAR WILL BECOME

• ANNUALLY 10,400 MONTHLY 10,407
• SEMIANNUALLY 10,404 DAILY 10,408
• QUARTERLY 10,406

• OVER 10 YEARS YOU WOULD HAVE 18,220 COMPOUNDED DAILY AND 14,802 COMPOUNDED
ANNUALLY, A DIFFERENCE OF 3,418.
 WHICH OF THE FOLLOWING DO YOU THINK IS
THE MOST IMPORTANT FACTOR IN
COMPOUNDING
a. THE AMOUNT OF MONEY YOU DEPOSIT
b. THE FREQUENCY THAT INTEREST IS COMPOUNDED
c. THE INTEREST RATE
d. THE LENGTH OF TIME YOU LEAVE IT DEPOSITED
e. B&D
 CREDIT AND DEBT
PERSONAL FINANCE FOR FISCAL WELLNESS
DAN W. ROYER, ED.D., CPA
 UNDERSTAND DEBT MANAGEMENT
• GOOD DEBT
• BUYS AN ASSET THAT APPRECIATES OR PROVIDES AN INTANGIBLE THAT PERMANENTLY IMPROVES YOUR
QUALITY OF LIFE.
• GOOD DEBT HAS A REASONABLE INTEREST RATE, AND IS FOR A TERM THAT SUITS YOUR FINANCIAL SITUATION.
• HOME OWNERSHIP IS AN EXAMPLE, AND OVER TIME YOU CAN BUILD EQUITY, WHICH IS THE DIFFERENCE
BETWEEN THE VALUE OF THE HOME AND THE DEBT THAT YOU OWE.

• BENCHMARKS TO MANAGE DEBT

• CALCULATE YOUR DEBT TO INCOME RATIO WHICH TELLS YOU HOW MUCH OF YOUR INCOME IS GOING TOWARD
YOUR CONSUMER DEBT.
• ADD UP YOUR LOAN COMMITMENTS AND DIVIDE BY YOUR TAKE HOME PAY.
• DON’T INCLUDE RENT OR MORTGAGE PAYMENTS, BUT DO INCLUDE OTHER LOANS OR CREDIT PAYMENTS.
• GUIDELINES:
• 10% OR LESS IS THE IDEAL LEVEL
• 15% OR LESS NOTHING TO WORRY ABOUT
• 20% OR MORE DEBT IS STARTING TO BECOME A PROBLEM
• 30% OR MORE YOU WILL UNLIKELY QUALIFY FOR ANY ADDITIONAL LOANS
 CREDIT CARD CHARACTERISTICS

• CREDIT CARDS REVOLUTIONIZED THE RETAIL INDUSTRY BY GRANTING CUSTOMERS

INSTANT CREDIT TO MAKE PURCHASES.
• PROBLEMS WITH CREDIT CARDS
• CREDIT CARD ABUSE IS A PERSONAL FINANCIAL EPIDEMIC.
• THE AVERAGE FAMILY CARRIES BETWEEN $8,000 AND $10,000 OF CREDIT CARD DEBT.

• CREDIT CARDS CAN BECOME A SOURCE FOR CASH ADVANCES.

• EXCEPT IN EMERGENCIES CASH ADVANCES ARE A BAD DECISION.
• MOST WILL CHARGE A FEE FOR THE CASH ADVANCE IN ADDITION TO A HIGHER INTEREST
RATE ON THE CASH ADVANCE ITSELF.
 IDENTIFY CREDIT MINIMUM CHARGES
• CREDIT CARD COMPANIES ARE REQUIRED TO SET A MINIMUM PAYMENT ON YOUR
STATEMENT THAT COVERS THE INTEREST PAYMENT AND PAYS DOWN SOME OF THE
PRINCIPLE.
• USING THE $8,000 AMOUNT AT 14 PERCENT INTEREST RATE, THE MINIMUM PAYMENT AT
2.5% OF THE BALANCE, YOU WILL PAY OVER $93 IN INTEREST IN THE FIRST MONTH
AND TAKE 278 MONTHS TO PAY OFF THE BALANCE.
• A LARGE LATE FEE THAT MAY BE $35 OR MORE IS OFTEN ASSESSED IF YOUR PAYMENT
IS EVEN ONE DAY LATE.
• GOING OVER THE CREDIT LIMIT WILL ALSO RESULT IN ANOTHER FEE.
• FINDING A GOOD CREDIT CARD MAY REQUIRE SOME SEARCHING, BUT BANKRATE.COM
MAY BE A GOOD PLACE TO BEGIN. OTHER SERVICES INCLUDE NERDWALLET.COM
 WHICH IS TRUE FOR CREDIT CARD CHARGES
AND INTEREST?
a. CREDIT CARDS CHARGE HIGH RATES OF INTEREST AND MAY REACH 100% OR MORE.
b. CREDIT CARDS REQUIRE A MINIMUM PAYMENT THAT IS OFTEN A PERCENTAGE OF THE
BALANCE.
c. IT WILL TAKE 20 YEARS OR MORE TO PAY OFF THE AVERAGE PER FAMILY CREDIT CARD
BALANCE OF $8,000.
d. CREDIT CARD INTEREST IS CALCULATED BASED ON THE BALANCE ON YOUR ACCOUNT
AT THE END OF THE MONTH.
e. B&C
 WHAT ARE DEBIT CARDS?
• ARE CONNECTED WITH BANK CHECKING AND SAVINGS ACCOUNTS, WHILE CREDIT
CARDS ARE NOT.
• WHEN YOU PURCHASE SOMETHING WITH A DEBIT CARD, THAT AMOUNT IS
WITHDRAWN FROM YOUR BANK ACCOUNT.
• YOU CAN ACCESS ATM MACHINE TO WITHDRAW CASH.
• YOU CAN ALSO RECEIVE CASH BACK ON TRANSACTIONS WITH SOME MERCHANTS.
• BE AWARE THAT IF YOU TAKE CASH BACK, THE BANK AND/OR THE MERCHANT MAY
CHARGE YOU A FEE.
• FOR EXAMPLE, DOLLAR GENERAL STORE OFFERS THE SERVICE BUT CHARGES
CUSTOMERS $1 FOR EACH CASH BACK TRANSACTION.
• YOUR BANK MAY ALSO CHARGE YOU A FEE.
 THE CONVENIENCE OF DEBIT CARDS
• PROVIDE THE CONVENIENCE OF CREDIT CARDS WITHOUT THE DANGER OF INCURRING
HIGH INTEREST DEBT ON IMPULSE PURCHASES.
• DEBIT CARDS ARE EASIER TO CARRY THAN CHECKS AND ARE MORE WIDELY
ACCEPTED THANKS TO THE AFFILIATION WITH VISA AND MASTERCARD.
• SOME VENDORS WILL SET UP AUTOMATIC PAYMENTS ON DEBIT CARDS.
• A DANGER WITH A DEBIT CARD IS THAT YOU LOSE TRACK OF TRANSACTIONS AND DO
NOT RECORD A FEW CHARGES.
• INCREASES THE RISK THAT YOU WILL OVERDRAW YOUR ACCOUNT.

• YOU CAN TRACK YOUR USAGE MANUALLY WITH A NOTEBOOK OR,

• YOU CAN FREQUENTLY CHECK YOUR ACCOUNT BALANCES ONLINE.
 WHAT IS A PERSONAL CONSOLIDATION LOAN?
• CONSOLIDATING HIGH INTEREST LOANS
• HIGH INTEREST CREDIT CARD DEBT CAN BECOME OPPRESSIVE (FINANCIALLY AND EMOTIONALLY).
• HOMEOWNERS CAN DO THIS THROUGH A LOW INTEREST HOME EQUITY LOAN.

• BENEFITS
• THE INTEREST RATE ON HOME EQUITY LOANS IS LOWER THAN CREDIT CARD INTEREST.
• THE INTEREST ON A HOME EQUITY LOAN IS TAX DEDUCTIBLE.

• IN ORDER TO BENEFIT YOU MUST

• STOP YOUR SPENDING HABITS THAT CREATED THE LARGE CREDIT CARD DEBT TO BEGIN WITH.
• DESTROY ALL CREDIT CARDS EXCEPT FOR ONE.

• LINE OF CREDIT
• BASED ON YOUR HOME EQUITY
• THIS IS A LINE OF CREDIT BASED ON EQUITY, BUT YOU WILL NEED TO BE CAREFUL WITH THE
AMOUNT YOU USE.
 THE RISK OF CONSOLIDATING DEBT IS

a. THAT YOU WILL NOT BE ABLE TO STOP THE SPENDING HABITS THAT CREATED THE
PROBLEM TO BEGIN WITH.
b. THAT YOU WILL END UP WITH A LARGE CREDIT CARD DEBT AGAIN, BUT THIS TIME YOU
WILL ALSO HAVE THE CONSOLIDATION LOAN.
c. THE FEES FOR A HOME EQUITY LOAN ARE SIGNIFICANT ENOUGH TO AVOID THIS OPTION.
d. YOU WILL CLOSE ALL OF YOUR CREDIT CARD ACCOUNTS AND HAVE NO EMERGENCY
SOURCE OF FUNDS.
e. A & B.
 KNOW CREDIT SCORE COMPONENTS
• YOUR CREDIT SCORE IS IMPORTANT TO YOUR FINANCIAL WELL BEING.
• AN INDUSTRY MONITORS PEOPLE’S NUMBERS AND CREDIT REPORTS AND NOTIFIES THEM OF CHANGES.
• THE FICO (FAIR ISAAC COMPANY) IS THE SINGLE MOST IMPORTANT NUMBER IN THE CREDIT INDUSTRY.
• WITH A FICO NUMBER THAT IS HIGH, YOU CAN GET A GOOD RATE ON A LOAN AND HAVE AN EASIER TIME
RENTING AN APARTMENT OR GETTING A JOB.
• RANKING OF COMPONENTS OF FICO AS FOLLOWS:
• PAYMENT HISTORY 35%
• AMOUNT OWED 30%
• LENGTH OF CREDIT HISTORY 15%
• NEW CREDIT 10%
• TYPE OF CREDIT USED 10%

• YOU CAN CHECK YOUR SCORE ON THE FICO WEBSITE FOR A FEE
• IMPROVING YOUR SCORE IS A LENGTHY PROCESS.
UNDERSTAND WHAT REPAIRING YOUR CREDIT
MEANS

• DEBT COUNSELING
• PEOPLE WHO ARE IN SERIOUS DEBT MAY TURN TO DEBT COUNSELORS.
• SEVERAL LEGITIMATE COUNSELING SERVICES OFFER ASSISTANCE TO PEOPLE IN FINANCIAL DIFFICULTY.
• THERE HAVE BEEN A NUMBER OF COMPANIES MAKE OUTRAGEOUS PROMISES AND WILL CHARGE FEES
THAT ARE EXTREME TO MAKE OUR DEBT PROBLEM GO AWAY.
• SECRET INSIDER INFORMATION DOES NOT EXIST, AND THESE COMPANIES ARE NOT ABLE TO MAKE YOUR
DEBT GO AWAY OUTSIDE OF FILING FOR BANKRUPTCY.
• SOME UNSCRUPULOUS BANKRUPTCY ATTORNEYS HAVE USED THESE SERVICES TO FRONT THEIR
PRACTICES.
• BANKRUPTCY IS A DRASTIC STEP THAT HAS LONG-TERM CONSEQUENCES AND IS ONLY FOR A SOLUTION
WHEN NOTHING ELSE WILL WORK.
 REMEMBER THE DIFFERENCES BETWEEN TYPES OF
BANKRUPTCY
• RULE CHANGES AS OF 2005.
• CHAPTER 7 – WIPES OUT ALL DEBT, AND IS CONSIDERED A STRAIGHT
LIQUIDATION.
• CHAPTER 13 – IS A REORGANIZATION OF DEBTS WHERE A PLAN IS ESTABLISHED
TO REPAY SOME OR ALL OF THE CREDITORS.
• THE REPAYMENT PLAN IS TYPICALLY SET UP OVER FIVE YEARS.

• BANKRUPTCY WILL NOT ELIMINATE BACK TAXES, AMOUNTS OWED TO STATE

GOVERNMENTS, STUDENT LOANS, CHILD SUPPORT OR ALIMONY, AND CRIMINAL
FINES.
• CREDIT COUNSELING IS REQUIRED.
• COMPETENT LEGAL COUNSEL IS MANDATORY.
 WHAT WILL YOU WILL NEED TO DO?

a. SCHEDULE A TIME IN A TESTING CENTER

b. REVIEW THIS POWER POINT PRESENTATION
c. REVIEW ALL OTHER POWER POINT PRESENTATIONS FROM PRIOR WEEKS
d. REVIEW PRIOR MISSED QUESTIONS.
e. ALL OF THE ABOVE
THE TEST WILL BE AVAILABLE AT 8:00 AM SEPTEMBER 27.